Linking loyalty to payment cards, especially through cobranded products, is a relatively new practice that retailers say helps them target offers to their best customers.

"Cobranded cards are not for every customer…they're for the most engaged customer," says Denise Incandela, former executive vice president and chief marketing officer of Saks Fifth Avenue.

Saks Fifth Avenue has seen positive results from its MasterCard cobranded card, and plans to expand the program over time, she says.

With a cobranded card, "from the retailer's side we see significantly more spend in the stores. And it pushes the card to the top of wallet because it's used in such an engaged way," Incandela says.

Incandela spoke in a panel discussion at the National Retail Federation's 103rd annual convention and expo on Jan. 12. She was joined by Stan Lippelman, vice president of marketing at Bass Bro Shops and Dan Morrell, assistant treasurer at Walgreen Co.

About 40% to 50% of spending at luxury retailers comes from the loyalty program, Incandela says. "Payment is a very interesting aspect and a new aspect on the loyalty side that expands the benefits," she says.

The cobranded cards are also helping retailers figure out how the shopping patterns of a specific person differ online from the in-store experience, Incandela says.

Bass Pro recently relaunched a cobranded card with MasterCard, with increased rewards for spending in a Bass Pro store, Lippelman says. "All the data MasterCard has is really amazing," and by combining MasterCard's data with its own, Bass Pro can send finely targeted ads which have high response rates, he says.

Bass Pro has aquariums, shooting ranges and bowling alleys in their stores. The company's average customer travels nearly 50 miles to the store and spends approximately three hours there, Lippelman says. Bass Pro aims to reproduce this level of engagement in other channels.

"There's a wow factor when people come into our stores," says Lippelman. And the question "is how do we bring to life the brand in digital spaces like we do in store."

Bass Pro has created interactive catalogs for its digital audience. For example, these catalogs allow customers to check out an interactive duck migration partners map and then book a trip to go duck hunting and buy all the necessary gear from the same page, Lippelman says.

"Our mobile traffic is exploding…but the convergence rate on mobile is dramatically lower than on" [a PC], says Lippelman. Digital wallets will help channels converge by making the checkout process more "thumbable" by getting rid of a lot of keystrokes.

Bass Pro began accepting PayPal online in 2012 and was an early supporter of MasterCard's MasterPass digital wallet. After launching with PayPal, Bass Pro saw a "fair amount of new customers" using the payment method, says Lippelman.

With the rise of mobile commerce, the shopping experience must considerably change as customers price-search and read reviews on their smartphones and tablets while shopping, Incandela says.

"We must reinvent the store experience to be a playground for the millennials," she says. Product reviews, trend information and user-generated content could all be integrated into the physical stores as well, she says.

For example, Saks allows users to scan items with their mobile device and get product reviews, she says. 

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